Dividend Watch: How Many Dividend ETFs Are Needed? (HDV, DVY, IDV, SDY)

This week marked the launch of yet another high-yield dividend exchange-traded fund.  This one came from iShares and the field of dividend oriented ETFs is getting crowded.  The name is the iShares High Dividend Equity Fund (NYSE: HDV) and it should be noted that iShares already had the iShares Dow Jones Select Dividend Index Fund (NYSE: DVY) and the iShares Dow Jones International Select Dividend Index Fund (NYSE: IDV).

All dividend ETFs have what investors would refer to as floating targets when it comes to yield calculations.  We do not yet have the true yield for the new ETF in the iShares High Dividend Equity Fund (NYSE: HDV). 

Yahoo! Finance lists the dividends and average volume as follows: iShares Dow Jones Select Dividend Index Fund (NYSE: DVY) has a 3.31% yield and trades about 717,000 shares a day; and the iShares Dow Jones International Select Dividend Index Fund (NYSE: IDV) is listed as having a 3.71% yield but it trades only about 170,000 shares in a day.

One competing dividend ETF from another family is the SPDR S&P 500 Dividend ETF (NYSE: SDY), with an average daily volume of more than 850,000 shares and an implied dividend of about 3.23%.

Calling for the success or failure of a new ETF is no easy task.  Stock-Encyclopedia lists well over 30 ETFs that are classified as ‘high dividend ETFs’ but some are specialty sector ETFs. 

While we would say that yet another dividend ETF from the same family may resort to volume cannibalization, the “HDV” actually has the easiest and best tick of all of these others.  An easy ticker won’t garner success, but it helps for recognition when you consider that keeping up the hundreds and hundreds of active ETFs is no easy task even for professional investors.

We’ll watch this one before judging it a success or failure.  Stay tuned.

JON C. OGG